The Environment and Corporate Culture Chapter 2

The External Environment The elements of the world constantly change Environment encompasses all elements outside the organization General Environment: Outer layer that directly affects organization Task Environment: Sectors that conduct transactions with the organization Internal Environment: Elements within the organization boundaries

The General Environment

General Environment: International New competitors, customers, suppliers Changes in social, technological and economic trends All organizations must compete and think globally Economic power has shifted to China and India The global environment is complex, ever- changing, and uneven playing field

General Environment: Technological Massive changes for all organizations Technology has become the tool for doing business Technology is driving innovation and competition Advances are impacting organizations and managers

General Environment: Sociocultural Demographic characteristics, norms, customs, and values The Hispanic population is expected to increase 188% Generation Y is flooding the workplace with new demands Single-father households are the fastest-growing type of living arrangement The U.S. population is continuing to age, companies create products and services for senior market

General Environment: Economic Economic health of the country/region Consumer buying power Unemployment Rate Interest Rates The global environment has made economic environment complex and uncertain The recent weakened U.S. economy has had a devastating impact on small businesses

General Environment: Legal-Political Government regulation; state, local and federal Political activities Government agencies and regulation Managers must recognize the power of pressure groups Work to influence companies to behave socially responsible

2010 Environmental Index

General Environment: Natural Organizations must be sensitive to the earth’s diminishing resources Plants, animals, rocks and natural resources Natural dimension does not have its own voice Environmental groups advocate action/policy Reduce pollution Develop renewable energy Reduction of greenhouse gases

Task Environment Customers Competitors Suppliers Labor Market

External Environment at Nortel

External Environment and Uncertainty

Environmental Uncertainty Uncertainty means that managers do not have complete information When the environment changes rapidly, there is high uncertainty Organizations must adapt, managers must be mindful Open-minded, independent thinkers Even in certain environments, managers need new ideas

Adapting to the Environment Boundary-spanning roles Interorganizational partnerships Mergers/joint ventures Shift from adversarial orientation to partnership orientation

The Shift to a Partnership Paradigm

The Internal Environment: Corporate Culture Corporate culture is the set of key values, beliefs, understandings, and norms that members of an organization share Symbols Stories Heroes Slogans Ceremonies

Levels of Corporate Culture

Four Types of Corporate Cultures

Shaping Corporate Culture for Innovative Response Important to attract, motivate, and retain talented employees Plays a key role in organization climate toward learning and innovation Successful companies balance culture and business performance Shaping and guiding employee behavior

Combining Culture and Performance

Leaders communicate through words Cultural Leadership Articulate a vision for the organizational culture that employees can believe in Heeds the day-to-day activities that reinforce the cultural vision Leaders communicate through words and actions